Fonterra is waking up to the risks of unsustainable dairy feed

It was good news to hear recently that Fonterra has begun to recognise the potential brand damage from dairy farmers moving away from grass-based milk production to rely on unsustainable supplementary feeds such as Palm Kernel Expeller (PKE). Fonterra are establishing and issuing voluntary guidelines about PKE for farmers to maintain the competitive advantage that New Zealand’s pasture-based systems gives them.

Pasture-based farming is considered a low input farming, in that animals largely eat what is grown on the farm. It requires significant expertise in pasture and animal management to optimise pasture production and quality, the production of milk solids and the cows’ reproductive health. More intensive farming can sidestep this systems-based approach in favour of importing supplementary feed such as PKE.

The dairy industry’s increasing reliance on PKE highlights the intensification of dairying and a major change in our agricultural systems. In 14 years New Zealand’s dairy herd has increased from 3.8 million in 2000 to 6.7 million dairy cattle in 2014. In the same time New Zealand has gone from importing 300 tonnes of PKE annually to importing nearly two million tonnes annually to feed more cows on more heavily stocked farms, at a cost of $424.8 million.

Last year New Zealand was the largest importer of PKE in the world , importing 30% of the international supply – showing that we are an outlier in terms of global dairy practice. Nearly two million tonnes was more PKE than New Zealand has ever imported, and highlights the industry’s reliance on this unsustainable feed.

This heavy use of PKE allows the industry to feed more cows on more heavily stocked farms, with major impacts on our water quality. It has major environmental impacts offshore too in promoting rainforest destruction through forest clearance to establish industrial palm oil plantations. PKE is a by-product of the palm oil industry, which is causing major destruction of rainforests in Indonesia, threatening orangutans and Sumatran tigers with extinction this decade.

It is disappointing that Fonterra’s proposed guidelines are only voluntary. To protect our climate, Indonesian rainforests and Fonterra’s brand, there needs to be less reliance on PKE and greater recognition of the value of pasture-based systems. This can also help encourage a shift of focus to adding value rather than continuing to increase volume in terms of cow numbers and milk supply.

The tables below show the massive increase in PKE imports in the last 15 years and New Zealand’s role as the biggest global consumer of PKE.

Total for all countries

Oil-cake and other solid residues; whether or not ground or in the form of pellets, resulting from the extraction of palm nuts or kernels oils

However if we look at the alternative dairy feed available it is not a simple matter to change from one to another as farmers in the worlds largest dairy industry are finding out. With corn prices skyrocketing due to its use in ethanol production, USA farmers are looking for alternatives and may well increase their PKE uptake.

Elephant grass is most important for cattle in Guangdong province because it can produce 8,000–15,000 kg of grass per Mu (1/15 of a hectare). Some of the farms plant a small area of stylo for calves. In the winter and spring season, they supply corn and elephant grass silage, and sometimes they also supply Chinese cabbage and sweet potatoes. Some of the farms supply grass hay the whole year round. In the concentrate, corn makes up about 40–50% and by-product feed ingredients such as wheat meal and soyabean meal make up about 30–50%. They also supply sufficient amounts of minerals, salt and some necessary trace elements. Most of the dairy cattle farms feed their cattle according to the feeding standards provided by the government. Sin-Tun dairy cattle farm uses a complete diet self-feeding system and gets very good results.

Maybe in New Zealand we need to grow elephant grass (especially in Northland, East Cape, Hakes Bay, Marlborough and Canterbury drought prone areas) instead of the rye grasses currently sown.

However if you want to be really green and feed cattle (dont know about dairy cows) then sawdust is a very good feed. Plenty of wood around to be ground up and treated as a feed (sheep might even like it)

Is it the same number of cows per hectare with or without the PKE?
The increased herd size gives more milk, but how does PKE help this?
Does the supplement increase milk per cow? Like vitamins or hormones?

I get that there’s something wrong with the simple way we described it… but didn’t quite get from what you said, how to understand it better. Can you find time to tell me better? My thumb is covered with digital grease… ain’t no green in IT 🙂 (and I know that… So I’m listening pretty hard now) .

Rural Johnny – thanks for comment. Supplementary feed has helped make the industry more intensive and also continued the focus on increasing supply rather than adding value. As Daan Steenkamp, Reserve Bank of New Zealand has said: “In the dairy sector in particular, production processes appear to have become much more input‐intensive (greater use of supplementary feed and irrigation) so that higher gross output (gross dairy output rose 35‐40 per cent in the decade from the 2002/03 season) does not translate to similar growth in real value‐added in that sector.”

Agghh, there is so much wrong with this analysis that I am reluctant to admit to being a Green Party supporter!

First, your conclusion that “More intensive farming can sidestep this systems-based approach in favour of importing supplementary feed such as PKE.” Is just plain unsubstantiated. There may be some farmers that sidestep cows from grass to PKE but I doubt it. PKE is a feed supplement and not a replacement for pasture – the reason that PKE consumption took off was because it was cheap ($0.22/kg in 2015) compared to other supplements required to keep production levels up.

Second, the numbers do not substantially justify your statement that “This heavy use of PKE allows the industry to feed more cows on more heavily stocked farms”. More cows yes but not because of the availability of PKE. The increase in the stocking rate has more to do with productivity gains from increasing herd sizes than it does with feeding PKE. From 2000 to 2014, dairy farm stocking rates increased by only 13.4%.

Third, if in 2014 every cow in NZ (4.9 million) were fed PKE, they would have consumed around 1.2 kg each per day. A lactating cow needs around 18 kg (of dry matter) per day, so the PKE is around 6% of their daily feed requirements.

Whilst I agree that feeding cows PKE detracts from the comparative advantage our dairy industry enjoys, and so ought be avoided, framing your campaign against dairying in this superficial way is titling at windmills and only serves to make the Greens look evangelical rather than pragmatic doers.

Considering that NZ dairy production per cow is way down on what other countries achieve (and I in no way argue that we should match Israel for example), banging on in the way you do is counter-productive.

I for one, prefer that the Greens address the positive things our farmers can do – for example improving the grass productivity so that they do not need to feed supplements.